Rumph v. Dale Edwards, Inc.

• Decision Date: 06 June 1979
• Docket Number: No. 14607,14607
• Citation: 183 Mont. 359,36 St.Rep. 1022,600 P.2d 163
• Parties: Hubert C. RUMPH and Margery Rumph, Plaintiffs and Respondents, v. DALE EDWARDS, INC., a Montana Corporation, Defendants and Appellants.
• Court: Montana Supreme Court

Page 163

600 P.2d 163

183 Mont. 359

Hubert C. RUMPH and Margery Rumph, Plaintiffs and Respondents, v. DALE EDWARDS, INC., a Montana Corporation, Defendants and Appellants.

No. 14607.

Supreme Court of Montana.

Submitted April 25, 1979.

Decided June 6, 1979.

Sandall & Cavan, Billings, John R. Carr, Miles City, for defendants and appellants.

Lucas & Monaghan, Miles City, for plaintiffs and respondents.

HARRISON, Justice.

The controlling issue in this appeal is the propriety of the District Court's decision to grant summary judgment in favor of respondents. As evidenced by the District Court file and the parties' briefs herein, we find that absolutely no genuine issues of material fact are present in this lawsuit and that respondents are entitled to judgment as a matter of law.

The purpose of this appeal is to determine the rightful owner of a small ranch located adjacent to the Powder River near Broadus, Montana. For many years prior to September 22, 1965, this ranch, which consists of approximately 523 acres of land and a residence, was owned by R. C. Hubbard of Broadus, Montana. Hubbard, who is now deceased, was not living on his ranch in the spring of 1965. He allowed Hubert Rumph, one of the respondents herein, to move onto the ranch that spring. A formal lease agreement, dated September 22, 1965, was later executed by Hubbard and Rumph. This lease agreement provided for a term of five years from and after April 1, 1965. The annual consideration for the lease of the property was $523 or $1.00 per acre. The lease agreement contained the following provision granting Rumph the exclusive option to purchase the property:

"That the Lessor does hereby give and grant to the Lessee, his heirs, executors, administrators and assigns, the exclusive right, privilege and option of purchasing the hereinabove described real property for the sum of Twenty Seven Thousand Five Hundred Dollars ($27,500.00). That this option may be exercised by the Lessee at any time after April 1, 1968 and not later than April 1, 1970, by giving written notice to the Lessor within the time set forth herein for the exercise of this option. That said notice shall be sent by registered mail to the Lessor at Broadus, Montana."

In February 1969, Rumph decided to exercise his option to purchase the property. This decision was duly communicated to Hubbard who acquiesced to the planned sale.

Hubbard and Rumph concluded that the sale could not be completed in February 1969. Both Hubbard and Rumph became concerned with the possibility that the sale could not be completed prior to April 1, 1970, the expiration date of the option to purchase found in the lease agreement. Therefore, on February 13, 1969, Hubbard and Rumph met at the Hubbard home to resolve this problem. It was mutually agreed that the best way to solve the problem was to extend the lease and option to purchase for an additional ten years. During this conversation, Rumph made notes of the parties' understandings. Later that evening, his wife Margery prepared a document entitled "lease rider" according to the mutually agreed upon terms.

The following day the Rumphs returned to the Hubbard home to execute the lease rider. Bonnie Rumph, a Notary Public, accompanied them to notarize the signatures.

Hubbard and Rumph then examined the lease rider to confirm that it properly reflected the agreement reached the previous day. One significant change contemplated by the parties was an increase in the annual lease payment from $523 to $623.

The lease rider provides in pertinent part that:

" . . . this lease shall run for ten (10) more years, expiring on April 1, 1980, instead of April 1, 1970."

The Rumphs' option to purchase the property was extended until April 1, 1980, by the following language of the lease rider:

"That the lessee, Hubert C. Rumph and/or Margery Rumph, has the option to renew this lease as well as the option to buy."

The sum of $523 was paid to Hubbard for the years 1965 through 1969. Pursuant to the terms of the lease rider, the consideration paid in 1970 and all subsequent years was increased to $623.

R. C. Hubbard died on January 7, 1971. At the time of his death, the property in question had not yet been conveyed to the Rumphs. For economic reasons, the decision was made by the attorney and the administrator of Hubbard's estate to sell the property at a public sale. The administrator's sale was duly and properly carried out.

The notice of sale of real property was duly published. That notice stated in pertinent part that: "Ranch subject to surface lease to H. C. Rumph." While no reference was made in the notice to respondents' interest, the purchaser was aware of his interest.

The administrator's sale was conducted in the courtroom of the Powder River County courthouse on October 27, 1972. Prior to that date, Rumph spoke with the attorney for the estate, Robert J. Brooks, and was assured by Brooks that the purchaser at the administrator's sale would take the land subject to Rumphs' lease and option to purchase. The record also reflects that Dale Edwards, the president of the appellant corporation, Dale Edwards, Inc., also spoke with Brooks prior to the sale. In addition, Edwards was provided with a copy of both the lease agreement and lease rider prior to the date of the sale.

Prior to the sale, oral announcements were made by the attorney for the estate to the effect that the sale was subject to the Rumphs' lease and option to purchase. Copies of the lease agreement and lease rider were circulated among prospective purchasers at the sale. Questions were asked regarding the validity of the lease and option to purchase and Brooks deferred his answers to other attorneys who were present and representing prospective bidders. These facts indicate it was unnecessary to include it in the notice for sale. Purchaser had ample notice.

The property was purchased by Dale Edwards, on behalf of Dale Edwards, Inc. The purchase price was $21,173.40, which was 90 percent of the appraised value of the property. Subsequent to the sale, but prior to the actual closing, Edwards' attorney, Mr. Carr, reviewed an abstract of title to the property. Certain title work had to be done including the acquisition of a quit claim deed from a Mr. Dahl, who held a lien on the property. Considerable difficulty was encountered by Brooks and Carr in obtaining this deed from Dahl. In fact, at one point, cash consideration was offered to Dahl for the deed. At no time was any question raised as to the validity of the Rumphs' lease and option to purchase.

The Rumphs have been in continuous possession of the property since April 1965. They have performed all of their obligations under both the lease agreement and the lease rider. No notice of default has ever been served upon the Rumphs by Dale Edwards, Inc., as required for any breach of the lease agreement. All annual lease payments have been made by the Rumphs to Dale Edwards, Inc., by cashier's checks.

On March 15, 1977, pursuant to the terms of the lease agreement and lease rider, the Rumphs exercised their option to purchase the property for the sum of $27,500. Dale Edwards, Inc., refused to perform under the lease agreement and lease rider and will not convey the property to the Rumphs. The amount of $27,500, representing full payment for the property, has been tendered to the Clerk of the Powder River County District Court by means of an irrevocable letter of credit.

This suit for specific performance followed Edwards' refusal to convey the property to the Rumphs. Summary judgment in favor of the Rumphs was entered by the District Court from which Dale Edwards, Inc., appeals to this Court.

Before considering the individual issues, we will discuss the validity of the District Court entertaining summary judgment motions in this matter.

Rule 56(c), M.R.Civ.P., provides that summary judgment is proper if " . . . the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."

Thus, summary judgment is appropriate when the moving party shows a complete absence of any genuine issue as to all facts which are material in light of those substantive principles which entitle him to a judgment as a matter of law. Harland v. Anderson (1976), 169 Mont. 447, 548 P.2d 613. This Court has consistently held that, under Rule 56, the party moving for summary judgment has the initial burden of establishing the complete absence of any genuine issue of material fact. Mustang Beverage Co., Inc. v. Jos. Schlitz Brewing Co. (1973), 162 Mont. 243, 511 P.2d 1. To satisfy its burden the moving party must make a showing that is quite clear of what the truth is, and exclude any real doubt as to the existence of any genuine issue of material fact. Kober v. Stewart (1966), 148 Mont. 117, 417 P.2d 476.

The primary policy and general purpose underlying Rule 56 is to encourage judicial economy through the prompt elimination of questions not deserving of resolution by trial. Silloway v. Jorgenson (1965), 146 Mont. 307, 406 P.2d 167.

While the initial burden of proof must attach to the moving party, that burden shifts where the record discloses no genuine issue of material fact. Under these circumstances, the party opposing the motion must come forward with substantial evidence raising the issue. Rickard v. Paradis (1975), 167 Mont. 450, 539 P.2d 718; Roope v. Anaconda Company (1972), 159 Mont. 28, 494 P.2d 922; Flansberg v. Montana Power Company (1969), 154 Mont. 53, 460 P.2d 263. Once the burden has shifted, the party opposing the motion is held to a standard of proof which is as substantial as that initially imposed upon the moving party. Harland v. Anderson, supra.

This standard of proof was clearly defined in Silloway v. Jorgenson, 146 Mont. at 310, 406 P.2d at 169, where ...